The Middle Class Can't Afford A Home In Half Of America's Major Cities

While there are many deals to be found in the current housing market – overall prices are down 30
percent from their peak in 2006 and mortgage rates are at
record-lows – many areas of the U.S. housing market remain
largely impenetrable for middle class Americans, according to a new
study out today from Interest.com.

The report found that in 11 of the 25 largest metropolitan areas
in the country, a median-income household is unable to afford a
median-priced home.

The least affordable cities included New York, San Diego, San
Francisco, Los Angeles and Miami – the combined populations of
which add up to approximately 14.5 million people.

“Despite all of the talk about how homes are more affordable than
they have been in decades,” says managing editor of Interest.com,
Mike Sante, in the report, “buying a home is still a big
challenge for many American households.”

Home affordability – a major concern before the housing crash –
has received little attention in the current market. But with
stagnant wages and rising expenses, many
Americans are finding even lower-housing prices unaffordable.

In San Diego, for example, many international real estate
investors are buying up local property, which is further
inflating home values. Donna Sanfilippo, president of the San
Diego Association of Realtors, says the city has the lowest
amount of inventory on the market since 2009. “We’re seeing a lot
of cash deals – 27 percent of all multiple listing service
deals,” he says in the report. “Investors are coming back into
the market.”

In San Francisco, the average price of a home is the highest in
the country at $552,600 – difficult to afford for even
those who earn above the median wage of $71,975. And in New
York, also known for higher home prices, taxes are more than
three times the national average.

In addition to median home prices and income, the study also took
into account average property taxes, homeowners’ insurance
premiums, and consumer debt and mortgage rates to come up
with the list. Data came from the U.S. Census Bureau, National
Association of Realtors, National Association of Insurance
Commissioners, and Experian, a major credit reporting agency.

"In many communities there is a fundamental disconnect between
the income families have and the costs of buying a home," says
Jeffrey Lubell, executive director of the
Washington-based think tank, the Center for Housing
Policy, in the report. "Falling house prices haven't solved
the problem. They've helped, but they haven't solved it."

*Paycheck Power Rating is the percent the median income falls
short of the income required for a median-priced home.